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Are you satisfied with the advice you get from banks and investment dealers? If not, get ready for a fight.

Financial institutions don’t readily admit to giving bad advice. Once you exhaust the firm’s complaint process, you may have to go to an external ombudsman or hire a lawyer to resolve your dispute.

Take Harold, for example, who was persuaded to switch mutual funds within the same fund family. He asked his adviser if there were any extra costs and was told it was a simple transfer.

Later, he received a tax slip from the fund company, showing he had a large capital gain for tax purposes. Not only would he have to pay more tax, but as a senior, he would also have to repay his Old Age Security pension.

What did the adviser have to say? He defended himself by saying he hadn’t been referring to taxes. Clients should go to an accountant to check on taxes.

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“My accountant isn’t a mutual fund expert,” Harold replied. “I only agreed to the change based on his recommendation that no other fees or costs would be involved.

“If I had known about the capital gain, I would not have made the transfer.”

In the end, Harold decided to switch to a new adviser. He was told he had a weak case for compensation because he made money from the fund switch (before tax).

Joanna Robertson is a certified mediator who focuses on financial and investment disputes. Before starting her company Robertson-Devir in 2008, she was a senior officer in various divisions of Manulife Financial.

I asked her why many clients have trouble with the complaints process at investment firms. She gave a number of reasons:

Investors often don’t have the experience to identify actions that are permitted (and thus more difficult to challenge) and actions that may be contrary to securities law, regulation or industry standards.

Given the costs of getting legal advice, they don’t analyze the strengths and weaknesses of their cases or find out how to negotiate the size of their damages.

They don’t understand the importance of “know your client” forms. Advisers have a regulatory duty to gather enough information about clients to make suitable investment recommendations for them.

They don’t understand the risks associated with a specific investment. There is often a “risk rating” related to the investment, which can be influential in determining if there is liability for the adviser.

They don’t know how to translate an adviser’s improper actions into the calculation of actual damages or compensation.

They don’t realize there are different ways to calculate compensation according to the assumptions made. Above all, they don’t realize that the calculation may be negotiable.

Writing in Canadian MoneySaver magazine, Robertson gives tips on how to improve your chances of a satisfactory settlement with your adviser.

State your concerns concisely. Outline what happened, identifying key dates and people involved.

What are you looking for to resolve your concerns? It may be the unwinding of trades, the refund of fees, interest costs or what you would have earned if your funds had been invested suitably (known as opportunity cost).

Ask for information you need to determine what financial harm was done. And ask what benchmark the firm will use to calculate opportunity costs.

Review all documents that may be used as evidence in the investigation, such as account opening applications and updated know your client forms. Do they support your view of what happened?

Since the investigator will take notes, you should, too. The information may be helpful in understanding a recommendation, negotiating a settlement or escalating the complaint to a higher level.

Robertson charges $200 an hour for mediations with two parties involved and $165 an hour for appraisals of a dispute. Sounds like a useful service.

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